|US: Carlyle Stands to Profit from Disaster|
March 21st, 2004
The war in Iraq is a year old, and the military-industrial complex is making out like a bandit.
That at least was what protesters were telling me the other day outside the Bechtel headquarters in downtown San Francisco, where people were chanting, the names of slain soldiers were read aloud and signs said "Shut Down the War Profiteers."
"We're lining Bechtel's pockets at the expense of a number of people's lives," said Paul LaFarge, a New York artist who was in town for the demonstration.
But why Bechtel? The engineering giant, with about $3 billion in Iraq-reconstruction contracts, has been accused of no wrongdoing (unlike, say, Halliburton, which the Pentagon says received millions of dollars in kickbacks from Mideast subcontractors and overcharged for services provided to U.S. troops).
"They're all part and parcel of the same thing," explained Amy Trachtenberg, a San Francisco artist, as she paused from reciting the names of the dead just feet from where somber-faced Bechtel workers were slipping past a police barricade and into their office building.
Yet Bechtel wasn't the only object of protesters' ire. Michael Daloisio, a San Francisco teacher, lamented that U.S. schools are struggling for cash while a variety of companies are "making billions off this illegal war."
Aside from Bechtel, he cited Halliburton, Lockheed-Martin, ChevronTexaco and the Carlyle Group.
Since the subject has come up, here's a little something about Carlyle that most people don't know. I can say that with confidence because even a Carlyle representative said he didn't know until I pointed it out to him.
The Washington investment firm, run by a who's who of Republican heavyweights, including former Secretary of State James Baker and former Defense Secretary Frank Carlucci, has put money into about 300 different companies and properties.
Those investments include United Defense Industries, a maker of combat vehicles, naval guns and missile launchers; and Sippican, a maker of submarine systems and countermeasures to protect warships.
They also include a New Jersey pharmaceutical firm called MedPointe, which just so happens to be one of only three companies licensed by the U.S. Food and Drug Administration to manufacture over-the-counter potassium iodide pills.
That's significant because potassium iodide can help protect against thyroid cancer in the event of exposure to large amounts of radiation -- from a small, easily transported nuclear weapon, say, or a terrorist attack on a nuclear power plant.
And that's significant because, in June 2002, President Bush signed into law the Public Health Security and Bioterrorism Preparedness and Response Act. It requires state and local officials to "provide adequate protection" by distributing potassium iodide to all public facilities within a few miles of a nuclear power plant.
And that, in turn, is significant because if you're one of just a handful of authorized makers of potassium iodide, you're in a position to profit handsomely if the worst-case scenario should actually come to pass.
The Carlyle Group and another investment firm, the Cypress Group, spent more than $400 million to acquire a controlling stake in MedPointe in May 2001. Carlyle alone owns about 42 percent of the firm.
Chris Ullman, a Carlyle spokesman, said he had no idea that MedPointe produces a potassium iodide pill called Thyro-Block. But when I explained what Thyro-Block can be used for, he said this was something to feel good about.
"Carlyle is proud to own companies that make products that keep America safe," Ullman said, adding that MedPointe allows Carlyle "to participate in the specialty pharmaceutical space."
The other two FDA-approved makers of potassium iodide are a small Florida outfit called Anbex that, prior to the Sept. 11 attacks, sold its pill, Iosat, primarily to doomsday-fearing survivalists; and a Swedish outfit called Recip that brought its lower-dosage pill, ThyroSafe, to the U.S. market in 2002.
John Hawkins, a MedPointe spokesman, said the company has no current contracts to supply Thyro-Block to any federal agency. He also said that sales of the drug totaled less than $500,000 in 2003 (MedPointe expects sales of all products, led by its allergy and respiratory medicines, to reach $400 million this year).
But Hawkins acknowledged that MedPointe has bid for government contracts in the past. He also declined to elaborate on the company's intentions for Thyro-Block.
"Our plans for all of our commercial products are confidential," he said.
Asked whether production of Thyro-Block might be increased due to continuing terrorism fears or whether government officials have spoken with MedPointe about ensuring an adequate national supply of potassium iodide, Hawkins remained vague.
"For competitive reasons, our production plans for the product and communications with customers are confidential," he said.
This much at least is clear: If a "nuclear incident," as the bioterror law quaintly puts it, should occur, MedPointe and the Carlyle Group would be uniquely positioned to benefit from catastrophe. That's not danger-mongering. That's a fact.
(For what it's worth, the New York Times reported Friday that government officials have quietly revived a cold-war program for rapidly analyzing fallout from a nuclear attack on U.S. soil. The program is intended to determine the perpetrator of an attack and help coordinate a military response.)
Bechtel might make a convenient target for protesters seeking a high-profile recipient of Iraq-reconstruction dollars. "It's all about capitalism," one masked protester, a self-styled anarchist, told me outside the company's headquarters.
But to find a company truly poised to profit from the unthinkable, he might want to make his way next time to the Transamerica Pyramid. That's where Carlyle's San Francisco office is located.
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